Will Tomorrow's Job Report Provide Some Relief To The Dollar?

In a recent
article I wrote about how the Federal Reserve and Washington D.C. will
do anything possible to save the markets from a bear market before the November
election. Unemployment is high, defaults on homes and credit cards are
rising and record amounts of taxpayer's money have gone to bail out failed
banks. The last thing Washington wanted was another bear market before a
November election. An emergency job bill was passed and the Fed started pumping
money into the system. Now we are beginning to see the outcome of the Fed's
actions as the world looks at a deteriorating dollar and the tension that
surfaces with volatile exchange rates. Recent job bills and quantitative
easing may help tomorrow's job report which could put some hawkish pressure
on The Fed to change their stance.

I believe over the next few weeks volatility could increase as a major shift
in Washington may occur. Although the equity markets are up, the dollar and
the economy have not shown improvement. The "Tea Party" movement and politicians
who push tax cuts and less government spending are gaining recognition. I would
not be surprised if there is a shift in power which may be bullish for the
dollar or another intervention from overseas to continue purchasing the dollar.
Tomorrow's job report could provide relief to the oversold dollar as additional
government jobs were created through recent legislation and massive cash infusion
from The Fed. The dollar could have a dead cat bounce.

Japan and China are facing pressure on growth from a devalued dollar. A cheap
dollar is hard on businesses exporting to the United States. Japan is especially
in a precarious situation where they have had to intervene to prop up the dollar
in order to support growth. It was short lived as the yen dropped only to rally
to new highs a few days later. This may lead to further easing by the Japanese
and purchases of the dollar. Japan has not needed to do this since 2004.

The Fed needed to ease this past summer as equity markets were on the brink
of double dipping. Central Banks had no problem to devalue as well since the
European Debt Crisis led a rush to the U.S. Dollar and at that time the Euro
was collapsing and the dollar was high. The threat of deflation after the May "Flash" crash
was very high and markets were on the brink of heading into new lows before
an election. The Fed injected a lot of money into the system causing a dollar
collapse and a rise in U.S. equities and a major breakout in precious metals.

Bullish sentiment in gold is reaching very high levels and if this deterioration
of the dollar continues we could see more sovereign debt and liquidity issues.
This could be bullish for the dollar. The weakness in the dollar will also
put hawkish pressures on The Fed. Many are expecting more quantitative easing
but the market may have a surprise if the Fed changes its language to support
the dollar and curb the speculation into gold and silver. The jobs report tomorrow
will prove to be a key figure on which The Fed will base its decision. Just
remember in every bull market there are two steps forward followed by a step
back. We may be entering that step back in precious metals.

I started reading charts at eleven years old. One day my father, a market
trader and technician found his library of books on technical analysis mysteriously
disappearing. He later found the textbooks under my bed. For many years day
and night I studied technical analysis and charting, working and learning from
my father who has over 50 years of trading experience. Technical analysis is
my passion and love.

In 2001, I started noticing the junior mining stocks and gold as having a
tremendous upside. For the past 9 years I have researched many juniors and
have identified the major winners using technical analysis and finding top
management.

I earned a Bachelors Degree in Mathematics and a Masters Degree. I learned
most of my technical analysis from the school of hard knocks, managing real
money for myself and for my family.

Constantly perfecting my craft, I have traded for two decades of success in
many different markets. I have been asked to post ideas to some of my students
who have taken my course in charting and technical analysis. I have made an
excellent living trading stocks for myself.

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